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April 1, 2013

Experts’ Tax Strategies; Power in Practice; Growth by Design: April Investment Advisor—Slideshow

Experts’ Tax Strategies; Power in Practice; Growth by Design: April Investment Advisor—Slideshow

We may only be certain about death and taxes, but at least one of them doesn’t have to be inconvenient. Effective tax strategies can keep clients’ tax bill low and protect their assets. We talked to seven tax experts about what they’re doing to manage their clients’ tax plans.

We also continue the Power in Practice series, detailing Commonwealth’s coaching program for advisors. As author Joni Youngwirth pointed out, a good advisor isn’t necessarily a good business person.

In the third article of the Growth by Design series, FA Insight’s Eliza De Pardo and Dan Inveen build on their previous articles to show how firms are growing sustainably.

Finally, David Canter of Fidelity explains what’s holding advisors back when it comes to succession planning and what they can do about it.

They call them experts for a reason. While tax changes are freaking out the average Joe, many advisors are calmly going about their business, lessening the tax burden on wealthy and high-net-worth clients. Strategies that were in place long in advance of the election, the fiscal cliff and the sequester are ticking along despite market booms and busts and worries over what might happen tomorrow. Marlene Satter spoke with a number of them who were willing to share their best and most effective tactics in protecting client assets as they grow.

Financial advisors may be great financial guides for their clients, but that doesn’t mean they’re good business people. Nevertheless, in the independent channel, an advisor’s work includes running a business. This becomes particularly evident when we look at numbers.

Beyond revenue, many advisors don’t spend enough time understanding the profits of their firms. In the third workshop of Commonwealth’s Power in Practice coaching program, the focus is on money. Specifically, the workshop addresses analysis of the advisor’s book of clients; ongoing production enhancement; analysis of the advisor’s fee structure; analysis of the firm’s financials; and valuation of the practice itself. Commonwealth’s Joni Youngwirth explains.

Bouncing back from the Great Recession, advisory firms have returned to growth mode. While the turnabout is a welcome one, few firms are growing in a manner that is sustainable. Common side effects associated with growth tend to be related to people. Providing clear career paths becomes more challenging, dependency on key individuals increases and staff become overworked and stressed. Additionally, growth frequently stresses a firm’s technology and operational infrastructure.

Some firms with significant growth have somehow escaped any negative consequences. A deeper analysis of these firms reveals that their ability to grow in a sustainable manner was hardly by chance. In the 2012 FA Insight Growth by Design study, FA Insight separated this group of “sustainable-growth” firms from those that had experienced challenges with growth. This latter group was deemed “growth-at-risk.”

The differences between the two groups were striking and offer important lessons for firms seeking higher quality growth and thereby greater enterprise value. In this article, the third in the 2012 “Growth by Design” series, FA Insight’s Dan Inveen and Eliza De Pardo explore these differences and highlight the best practices that they reveal.

If you’re like three-quarters of the investment advisors in the 2011 Fidelity RIA Benchmarking Study, you don’t have a succession plan for your business, or you have one, but it’s not ready to be implemented.

Ask yourself: How would you feel if 75% of your clients did not have wills and estate plans for their families?

You wouldn’t let it happen to your clients, so don’t let it happen to you. David Canter, executive vice president of practice management and consulting with Fidelity Institutional Wealth Services, explains what’s holding advisors back when it comes to succession planning and what they can do about it.

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